The news that Goldman Sachs had struck a deal was viewed by many on Wall Street as a something of a victory for Mr. Blankfein.
Only weeks ago, as Goldman’s negotiations with federal authorities dragged on and the bad publicity mounted, some speculated that Mr. Blankfein might lose his grip on Goldman.
Instead, Mr. Blankfein will, at least for now, remain both chairman and chief executive of the bank, the most profitable in Wall Street history. Some had speculated the legal dustup would at least cost him the chairmanship.
Indeed, the settlement, while one of the largest in financial history, was half the size that many analysts had originally predicted. It represents a mere 15 days of profits, based on Goldman’s 2009 earnings.
Whether Goldman will ultimately change senior management in light of the humbling settlement is uncertain. But few inside or outside Goldman see an immediate threat to Mr. Blankfein, who, for many Americans, has become the public face of Wall Street excess.
Mr. Blankfein’s remarkable and controversial success in guiding Goldman through the financial crisis, punctuated by his claims that Goldman was doing “God’s work,” made him an object of public scorn. But on Wall Street, where money is the ultimate measure, he seems to have delivered once again.
“It looks like a big win for Goldman,” said David Smick, a Washington-based financial adviser. “It seems like a paltry sum.”
Mr. Smick continued: “I assume Blankfein’s future is determined by the Goldman stock price. So far he gets an A.”
Goldman’s share price, beaten down after the Securities and Exchange Commission filed civil fraud claims against the bank in April, snapped back on Thursday. The stock rose $6.16, to $145.22. The stock is still down nearly 14 percent this year.
Coming on the same day that the Senate passed an overhaul of the financial regulation, the long-awaited settlement sweeps aside some of the dark clouds hanging over Goldman and Mr. Blankfein, who has helped transform the bank into a trading powerhouse. Yes, Goldman got a black eye. But it was not bloodied nearly as badly as many had expected, or perhaps hoped.
Goldman and its leader may not be free and clear, however. It is possible that investors or Goldman shareholders may yet file civil claims against the bank.
“I don’t know what this means for Blankfein,” said Bert Ely, a banking analyst. “There has been scuttlebutt for months about whether he would survive this.”
But he said the fact that Goldman’s share price rose as word spread about the coming announcement meant investors thought the settlement was good for Goldman.
“Goldman appears to have put its government problems behind them, but they are not over this by any means,” Mr. Ely said.
For many, the timing of the settlement, coming so soon after the passage of the financial regulation bill, seemed more than coincidental.
“Were they told, ‘Sit on your hands, don’t fight reform, and we will agree a settlement?’ ” wondered Mr. Smick.
But he said there were still questions ahead for Goldman, in particular its continuing status as a bank holding company, which gives it the tremendous advantage of access to the Federal Reserve discount window and cheap money. He said that issue had not been addressed in the financial bill.
After the announcement, banking analysts rushed to affirm their glowing outlook for Goldman stock — analysts at Credit Suisse confirmed their “outperform” rating for Goldman, saying the deal removed an overhang for Goldman.
“For Goldman, we do not anticipate any material long-term impact to the firm’s client franchise,” Howard Chen, a banking analyst at Credit Suisse, said in a research note. Nor, Mr. Chen wrote, did Credit Suisse envision senior management changes related to the settlement.